Enhancing the Role of Diaspora in Sustainable Development of Armenia by Gohar Gyulumyan, Terry Sanford Institute of Public Policy, Duke University, AIPRG Conference May, 2008

Outline Definitions of basic terms Definitions of basic terms Stakeholders Stakeholders Regional and development contexts of Armenia Regional and development contexts of Armenia The Armenian diaspora The Armenian diaspora The Policy Problem The Policy Problem Policy alternatives Policy alternatives Recommendations: A new role for the diaspora Recommendations: A new role for the diaspora

Definitions Diaspora – geographic dispersion of a nation, settlement in different political entities, but members maintain their national identity, unity and solidarity Diaspora – geographic dispersion of a nation, settlement in different political entities, but members maintain their national identity, unity and solidarity Sustainable Sustainable Development Development Capacity and opportunity to sustain long-term development Maintain Democratic Stability Ensure Regional Stability

Major Stakeholders Home Country Armenia Host countries D I A S P O R A International Organizations Neighboring countries in the region

Armenia: Regional Context Russia Regional context: high density of conflicts, unequal access to cost-effective infrastructure ARMENIA

Armenia: Development Context GDP per Capita – 2600 USD (2007), GDP per Capita – 2600 USD (2007), Transfers from diaspora (per capita) – 350 USD, Transfers from diaspora (per capita) – 350 USD, Poverty – 29.8%, extreme poverty – 4.6% (2005) Poverty – 29.8%, extreme poverty – 4.6% (2005) Resource poor, land-locked, Resource poor, land-locked, Transportation corridors blocked Transportation corridors blocked Economic structure Economic structure construction(22%), Industry (20%), Agriculture (18%) Foreign trade Foreign trade 49% of GDP, high export concentration ratio Transition Challenges Transition Challenges Institutions, practices

Diaspora Communities Darkness of the color represents the density of Diaspora communities

Diaspora: Major Facts 5-6 mln, hosted by 70 countries 5-6 mln, hosted by 70 countries 1 bln USD (2006) annual assistance to Armenia 1 bln USD (2006) annual assistance to Armenia ( current transfers, remittances, humanitarian assistance ) Poverty reduction support and post-conflict infrastructure rehabilitation Poverty reduction support and post-conflict infrastructure rehabilitation Part of institutional power sharing arrangements in Armenia (political parties, printed media, etc.) Part of institutional power sharing arrangements in Armenia (political parties, printed media, etc.) Regional Conflict – human, financial, material resources, advocacy Regional Conflict – human, financial, material resources, advocacy

Diaspora Funding Political Parties Benevolent Org. Foundations Individuals Humanitarian/food Assistance Sponsoring cultural activities Improving Healthcare facilities National Defense and security Branches of Church Infrastructure Repair and post-conflict reconstruction Supporting education Institutions Channels of Diaspora Assistance

Dynamics of Diaspora Assistance

Challenges Most of the diaspora assistance Most of the diaspora assistance has a philanthropic nature has a philanthropic nature Dispersed into different projects Dispersed into different projects Creates sustainability concerns Creates sustainability concerns Armenia Armenia Lack of a single institution responsible for diaspora affairs Lack of a single institution responsible for diaspora affairs Capacity gap to guide the diasporas efforts toward achieving its development objectives Capacity gap to guide the diasporas efforts toward achieving its development objectives

The Problem Tree Strategic bargaining in political landscape Low level of export diversification, Growing regional disparities between Yerevan and regions CONSEQUENCES Low employment response to growth performance Fragile political stability Persistent Tensions with neighbors in the region High transaction costs Sustainability concerns Inability so far to derive full potential benefits from diaspora Policy Problem ROOTCAUSES Primary focus on philanthropy Institutional rigidity Weak guiding capacities Inadequate institutional arrangements Different perception of national identity mistrust Competitive political environment Culture of talk Heterogeneity Unwillingness to share the market Poor governance and accountability capacity Transition challenges

What Can be Done? Policy Alternatives 1. Status Quo – unsustainable Armenia's Export Pattern and the Growth in Private Transfers (1998=100) Growth Rate of Real GDP and Transfers from Abroad (1998=100) 2. Partial revision of diasporas role – limited scope 3. Re-vision of diaspora role – better utilization of the nations comparative advantage

New Role for Diaspora to Promote Armenias Sustainable Development Create capacities and opportunities to sustain long-term development path Create capacities and opportunities to sustain long-term development path Support to achieve democratic stability Support to achieve democratic stability Assume the role of a Third Sider in the matters of regional context Assume the role of a Third Sider in the matters of regional context

Diaspora to promote Armenias Sustainable Development Recommendation : Diaspora to change the nature of its assistance Decrease philanthropy and increase business partnerships, Decrease philanthropy and increase business partnerships, Increase responsiveness of diaspora institutions, Increase responsiveness of diaspora institutions, Offshore production activities to Armenia, Offshore production activities to Armenia, Job opportunities, business culture, economic diversification Assist Armenias market access and international integration, ( export expansion ) Assist Armenias market access and international integration, ( export expansion ) Mobilize expatriate Armenians Mobilize expatriate Armenians to close the capacity gap to close the capacity gap ( examples: UNDP TOKTEN system, Korea)

Armenia to Promote its own Sustainable Development Recommendation : Foster reforms, lead the dialogue Government Improve domestic competitive environment, Improve domestic competitive environment, Create new institution in charge of diaspora affairs, Create new institution in charge of diaspora affairs, Improve public sector accountability, Improve public sector accountability, Improve quality of public discourse, Improve quality of public discourse, Create trustworthy and transparent environment for partnership Create trustworthy and transparent environment for partnership Engage diaspora in policy dialogue Engage diaspora in policy dialogue Private sector Create space for business partnership Create space for business partnership

Treasury Single Account, Central Bank of Armenia Diaspora Conference Treasury Office 1 Treasury Office 2 Treasury Office 42 Com munit y PIU Com munit y PIU Diaspora Assistance, (Institutions and Individuals) Ministry of Foreign Affairs and All Armenia Fund Secretariat or Ministry Government of Armenia Institutional Arrangements

Expected Benefits Armenias sustainable development perspective Armenias sustainable development perspective Good governance and openness Good governance and openness Democratization of the society Democratization of the society Spillovers and positive externalities for other countries in the region Spillovers and positive externalities for other countries in the region Expansion of regional Expansion of regionalmarkets Financial services Financial services Commerce, tourism, etc. Commerce, tourism, etc.

Thank You